Calculate NOI From a Messy Statement
Rebuild NOI by adjusting income and expenses into a supportable operating view.
Seller NOI is $263,000 on a 24-unit property, but the statement includes a one-time insurance refund and excludes professional management. Supportable NOI includes recurring property income minus recurring operating expenses before debt, depreciation, and capital improvements. The common trap is to accept seller NOI because the arithmetic ties, even though the income and expense categories are not underwritten correctly. NOI normalization Start with recurring income Use income likely to repeat under normal operations. Normalize operating expenses Add costs a buyer will actually incur. Keep financing and capex below NOI Do not mix ownership structure with operations. Remove one-time income $515,000…
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